Friday’s ETF Chart To Watch: SPDR S&P Retail ETF (XRT)

Bullish sentiment permeated Wall Street on Thursday as investors couldn’t help but look past looming “fiscal cliff” woes and focus instead on the positive data at hand. Major stock indexes settled comfortably in green territory as investors expressed their cheer over the latest home sales report and GDP data, both of which beat expectations; pending home sales in October grew by 5.2%, marking a noticeable jump from last month’s reading of 0.4%, while economic growth improved to 2.7% from 2% previously [see Where U.S. ETF Investors Invest Overseas].

Later today our spotlight will focus in on the State Street SPDR S&P Retail ETF (XRT, A), which could be in for a volatile trading session depending on how markets digest the latest consumer spending data. Analysts are expecting for October’s consumer spending figure to show an increase of 0.1%, marking a contraction from the previous reading of 0.8% [Download 101 ETF Lessons Every Financial Advisor Should Learn].

Chart Analysis

XRT is likely on the radar screen for many speculators as this ETF is currently trading right around a major resistance level,which means that a breakout in either direction could occur over the coming sessions. Since peaking at $65.47 a share on September 14, 2012, this ETF has posted a series of lower-lows and lower-highs until recently bouncing off its 200-day moving average (yellow line). Although near-term price action has been fairly bullish for XRT, investors looking to go long at current levels should exercise caution as this ETF has previously tried, and failed, to summit the $64 level on October 5 and more recently again on November 2, 2012 [see Consumer Centric ETFdb Portfolio].

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Despite the possibility of a pullback in the near-term, this ETF does presents a very attractive entry point for those still bullish on the retail sector given the steady long-term uptrend (blue line) at hand [see 3 ETF Trading Tips You Are Missing].

Outlook

If the latest consumer spending report misses the mark and paints a bearish picture for retailers, XRT could face profit-taking pressures throughout the day; in terms of downside, this ETF has immediate support at $62 a share followed by the $60 level. On the other hand, an upbeat report may inspire a rally in this sector; in terms of upside, XRT faced major resistance around $64 a share. As always, investors of all experience levels are advised to use stop-loss orders and practice disciplined profit-taking techniques.

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